More misinformation from PhonepayPlus
Some time ago, I received the following letter from a very senior person at PhonepayPlus (NB this has been OCRed so any mistakes may be my fault rather than the original author's):
12th March 2009
Dear Mike99
Phonepayplus Business Plan and Budget 2009/10
Your Submission
As you will have gathered, we have recently issued a statement confirming Ofcom approval of the Phonepayplus business plan and budget for the forthcoming year, and have set the levy as 0.48% of outpayments. I am now writing to provide you with our feedback on your written response to the consultation.
I trust that it will recognise that we value your response to our consultation exercise, that we have weighed your comments and suggestions with those received from other organisations, and that we have modified our budget proposals as a consequence of the responses received. By giving personal feedback to you, we hope to help improve the transparency, responsiveness and accessibility of this and future consultations.
In respect of our proposed budget increase of 2.4%, there was a consensus across shareholders that this would be inappropriate in the current economic climate. We therefore reviewed our proposed activities, and felt that savings could be made through further efficiencies to our existing proposals, which covered natural wastage; a reduction in size of the leadership team; reduced consultants costs, and a better use of resources across teams in project structures. We have therefore:
• reduced and re-set the scope of our plans to deliver consumer education for 2009/10, which we felt was achievable without compromising our regulatory remit in this area.
• reduced our proposed salary levels from a prospective 2.5% increase to one of 1.7%, which is more in tune with current marketplace comparators.
• reduced our proposed spend on external consultants.
As a consequence of these savings, our proposed budget increase of 2 4% has led to a zero budget increase which is a real term reduction at a time when Ofcom have asked us to take on further responsibilities with the regulation of 0871 services.
Turning now to the specific point raised in you r letter of 28th January, I thought it might be helpful if I were to comment on the principal ones in sequence, as follows:
1. Trust - Phonepayplus investigates complaints received from the public and although we are now developing a capacity, within the constraints of the budget available, to proactively monitor services we are not able to change behaviours in the marketplace overnight. Nevertheless, we have this year barred one individual from providing any services for a period of two years, and last week barred eight organisations and individuals from providing services.
2. Serious offenders - as a matter of course we refer instances of prima facie fraud to the City of London Police, and have had recent discussions with the Serious and Organised Crime Agency regarding referrals. We have arrangements in place with each of the OFT and ICO regarding referrals, although they do have thresholds for taking on prosecutions. We have a new relationship with the Insolvency Service, and refer individuals for disqualification from holding company directorships. We have an ongoing relationship with HMRC.
3. Opting out of PRS services - this is currently under consideration as part our project to develop a new code of practice. We cannot take the action you propose under our current code, but we do provide guidance on our phonebrain site as to how barring can be done.
4. Risks - we operate a market risk register, highlighting some thirty concerns as to marketplace activity, which we prioritise and action for monitoring and subsequent investigation. This is a comparatively recent initiative, and would have been beneficial in more quickly addressing the incidents of the past to which you refer.
I do intend to open up any further correspondence or dialogue on the above issues, but I can reassure you that your responses to our consultations are read and reviewed, and in some instances have caused us to reflect upon our approach.
Your sincerely
Verysenior Phonepayplusperson
I have just got around to replying:
Dear Mr Verysenior Phonepayplusperson
Thank you for your letter of 2009 March 12. I understand that you will not be able to reply to this letter, but I hope you will perhaps read it.
In your letter (point 1) you write: “we are not able to change behaviours in the marketplace overnight”.
Personally, I fail to see how you can expect to change behaviour ever using current policies.
Three years ago, one of the firms you regulate stole a sum of money from my wife. Although we got our money back, you refused to investigate the case I raised - although, for several months, you pretended that you were investigating my case. Three years on, PhonepayPlus has not introduced a single measure to protect mobile users from the type of crime that my wife was the victim of (they stole less than £4.50 per week from her) and the firm that stole from her, and many other firms stealing in exactly the same way at that time are still, three years on, stealing money from other victims in exactly the same way.
This firms obviously make more than enough money from their crimes to pay the PhonepayPlus fines and still make a handsome profit. Why on earth should they change their behaviour? Not only has this behaviour not changed over that last three years (let alone “overnight”), it has actually increased, and unsolicited reverse charge SMS is now the biggest source of complaints to your organization.
You go on to say (point 2) that “as a matter of course” you refer serious instances of “prima facie fraud to the City of London Police” and “have had recent discussions with the Serious and Organised Crime Agency regarding referrals”.
Please forgive my scepticism, but back in June 2004, at the height of the dialler crisis, your Senior Policy advisor Suhil Baht said: “when ICSTIS investigates these complaints, it often finds that the companies concerned appear to be conforming to ICSTIS' standards” and went on to claim that ICSTIS “have recently started talking to the Hi-Tech Crime Unit so they can do a criminal investigation.”
Three years later, however, Paul Whiteing (now Chief Executive of PhonepayPlus) said (of the same incident): “ICSTIS were unable to identify that any breaches of our code of practice had occurred and as a result of this we did not forward the case on for criminal investigation.” – which is more or less the exact opposite of what Mr Baht said.
Moreover, in relation to the TV based PRS frauds, you said “ICSTIS has made clear, publicly, that where evidence of fraud or other criminal practice comes to light, it will not hesitate to pass on that information to the police.” but then you also said “the ICSTIS review, published on 29 January 2007, did not find any evidence of unlawful practices” – you can’t have been looking very hard!
As for unsolicited reverse charge SMS “services” (cf unsolicited promotional SMS), while the Dept for Business, Enterprise & Regulatory Reform insist (publicly at least) that this is illegal under the 2003 Act, PhonepayPlus take the opposite view; so it is difficult to see why you would even consider reporting this to the police.
Of course I realize that the failure of the authorities to treat PRS theft and fraud as crime, may not be entirely PhonepayPlus’s fault, but not only do I see PhonepayPlus repeatedly issuing contradictory statements on legal aspects of PRS, I don’t see PhonepayPlus calling anywhere for the authorities to treat this type of crime more seriously.
Perhaps you might consider posting a list of successful prosecutions for PRS crime on your website?
At point 3 you say “Opting out of PRS services - this is currently under consideration as part our project to develop a new code of practice. We cannot take the action you propose under our current code, but we do provide guidance on our phonebrain site as to how barring can be done.”
I’m sorry, but this really is complete nonsense. You do not “provide guidance on [your] phonebrain site as to how barring can be done” and for a very simple reason: it is not (generally) possible to bar incoming reverse charge SMS. Your phonebrain site used to say that this was possible (though, since this was entirely untrue, your site did not – even then – “provide guidance” on how to perform this impossible action) but when I pointed out to you that this was untrue, you changed the wording (full story at: http://www.the-scream.co.uk/forums/t25035.html?).
Two of the networks will now allow customers to opt out of all PRS (including reverse charge SMS “services”): Vodafone and T-mobile – though both make it as difficult as they can for customers to access this facility. The other networks refuse to budge. In my opinion, all the networks should be forced as a matter of urgency to allow customers to opt out of all PRS and this should be the default for minors. The opt-out facility for adults should be made available (and explicitly so) at the point of sale.
If you have a different opinion, I should be happy to hear it, but you refuse point blank to discuss this issue preferring (as above) to issue misinformation or change the subject and talk about something else (such as “STOP”) instead.
For everyone who chooses not to opt out of PRS, there are two measures that would make PRS much safer to use in about five minutes:
1. Make the networks (the “retailers” in the value chain) responsible for delivering honest services rather than the service providers (the “wholesalers” in the value chain) or the content providers (the “manufacturers” in the value chain). This measure would bring PRS into line with the rest of commerce and have numerous benefits – not least because the networks (unlike the other PRS players) have a reputation to maintain with the public and this would provide a very powerful incentive for them to clean up their own acts and insist on honest behaviour from their PRS business partners.
2. Insist on a robust and verifiable mechanism for all reverse charge SMS transactions. The current arrangement whereby a PRS company can help itself to £4.50 of my phone credit each week and require me to prove that I did not ask them to do this is simply intolerable.
By refusing not only to consider these measures but even to acknowledge that they have been raised, PhonepayPlus is performing a huge disservice – both to the long suffering mobile phone user and, ultimately, to the PRS industry. Traditional PRS “services” are nose diving (probably a good thing) and there is no sign of more genuinely useful services (such as PayForIt) taking off. The blame for this state of affairs, I submit, can be laid squarely at PhonepayPlus’s door. Without adequate regulation and consumer protection, the PRS industry is doomed.
Yours sincerely
Mike99
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21-April-2009, 11:30
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